Major discount retailer poised to file for Chapter 11 bankruptcy

The retail industry’s struggles over the past two years have prompted several major chains to file for bankruptcy protection to reorganize or liquidate and close their businesses.

Home decor retailers Bed Bath & Beyond and Tuesday Morning filed for Chapter 11 in 2023, but did not survive the bankruptcy filings and those retailers disappeared.

Related: Popular Retail Manufacturers File for Chapter 11 Bankruptcy

Party City and Rite Aid both filed for bankruptcy in 2023, with Party City exiting in October 2023 and Rite Aid exiting on September 5, 2024.

Teen clothing chain Rue 21, discount retailer 99 Cents Only, and home improvement retailer LL Flooring filed for Chapter 11 bankruptcy in 2024, prompting the companies to liquidate their stores.

Several mattress retailers have also filed for bankruptcy in the past two years, including Mitchell Gold + Bob Williams and Z Gallerie which filed in 2023 and The RoomPlace, Factory Mattress, Conn’s HomePlus and Metro Mattress so far in 2024.

Joann’s fabric and craft store and Express mall clothing store chain filed for Chapter 11 bankruptcy in 2024 and closed stores as part of reorganizations and continues to operate.

Finally, discount home goods retailer Big Lots plans to file for Chapter 11 bankruptcy as soon as Sept. 8, seeking to sell all of its assets through a bankruptcy process under Section 363, Bloomberg reported.

Related: Bankrupt rival Home Depot to liquidate remaining stores

The bankruptcy filing and sale are necessary for the company after years of declining sales. The company in Securities and Exchange Commission filings blamed high inflation for the negative impact on its customers’ purchasing power. Big Lots had argued that mainstream consumers were reluctant to buy high-ticket discretionary items.

Big Lots has struggled in recent quarters, with CEO Bruce Thorn saying a slowing economy has soured customers and hurt profits. The company posted a 10.2 percent drop in sales to $1.01 billion in the first quarter and a loss of $132.3 million.

“While we made substantial progress in improving our business operations in the first quarter, we missed our sales targets due in large part to the continued decline in consumer spending by our core customers, particularly in high-ticket discretionary items” , Thorne said.

Big Lots plans to continue operating under bankruptcy protection and seek a bidder for a potential sale or auction. The retail chain, which has about 1,400 stores, revealed in July that it would close 315 underperforming stores.

More bankruptcy stories:

• Another popular ice cream brand files for Chapter 11 bankruptcy
• The popular burger chain is facing possible Chapter 11 bankruptcy
• A large shipping company files for Chapter 11 bankruptcy to liquidate it

On Aug. 12, the company hinted it could file for bankruptcy as soon as its board approved one-time cash retention awards totaling $5.24 million to four top executives, according to a Commission Form 8-K for Securities and Exchange. Offering retention bonuses is a common practice before a company files for bankruptcy.

One-time bonuses included $3.15 million for CEO Bruce K. Thorn, $969,938 for Chief Financial Officer Jonathan A. Ramsden and $561,068 each for Chief Legal and Governance Officer Ronald A. Robins Jr. and Chief Human Relations Officer Michael A. Schlonsky.

The discount retailer postponed its September 6 second-quarter earnings release and rescheduled it for September 12.

Big Lots’ stock price has fallen more than 90 percent in the past year and was down more than 43 percent in after-hours trading on Sept. 6 to 28 cents a share.

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